Adobe’s AI Dreams Hit a Speed Bump As Q4 Forecast Disappoints Wall Street
Adobe cleared the bar with its Q3 performance, but the picture it painted for Wall Street wasn’t as pretty as they would’ve liked. Despite a modest earnings beat, $ADBE tumbled ~9% on Friday. The reason? A downgraded Q4 forecast, especially for its core Digital Media business, left analysts with doubts about the pace of Adobe’s AI monetization.
- While Adobe rode the AI wave to strong Q2 growth, the weakened forecast highlighted a “well below seasonal guide for fiscal fourth quarter.”
- This has sparked concerns about delayed returns on AI investments — particularly in the Photoshop owner’s image and video generation tools — that might take longer to materialize, especially with well-funded competitors like Stability AI and Midjourney in the mix.
Analysts weigh in: A Morgan Stanley analyst summed up Adobe’s Q3 as “a tale of two quarters,” and Wall Street is proceeding cautiously. Jefferies maintained a Buy rating but pointed to questions surrounding the guidance — a sentiment echoed by analysts at JPMorgan and Mizuho, who expressed disappointment in the adjustment. Meanwhile, Morgan Stanley called the guidance “conservatism” and remains bullish. While there’s still general confidence in Adobe, analysts are now a bit more skeptical about the timeline for AI-driven returns.
